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Feb 11, 2015

Mondelez International Reports 2014 Results and Provides 2015 Outlook

Financial Schedules and GAAP to Non-GAAP Information
Earnings Release
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DEERFIELD, Ill., Feb. 11, 2015 /PRNewswire/ -- Mondelez International, Inc. (NASDAQ: MDLZ) today reported its 2014 results, reflecting strong Adjusted Operating Income1 margin expansion and Adjusted EPS1 growth. 

"In 2014, we delivered strong earnings growth, margin expansion and cash flow in a challenging consumer and retail environment by driving record net productivity and aggressively reducing overheads," said Irene Rosenfeld, Chairman and CEO.  "At the same time, we delivered organic net revenue growth in line with our expectations as we raised prices to recover higher input costs, protect profitability and ensure the health of our franchises. 

"As we execute our transformation agenda in 2015, we expect to deliver modest organic revenue growth as well as solid margin expansion and strong constant-currency earnings growth.  We remain on a clear path to achieve our 2016 margin target and to drive sustainable earnings and revenue growth over the long term.  We're continuing to execute our cost-reduction initiatives to expand margins and to make the necessary foundational investments in our brands, innovation platforms, routes to market and supply chain, so we're well-positioned to accelerate revenue growth as consumer demand improves."

Full Year GAAP Results

On a reported basis, net revenues were $34.2 billion, down 3.0 percent, including a negative 5.1 percentage point impact from currency.  Operating income was $3.2 billion, down 18.4 percent, including a negative 12.4 percentage point impact from restructuring costs2 and a negative 8.7 percentage point impact from cycling the prior-year reversal of an indemnity accrual related to the 2010 acquisition of Cadbury3.  Diluted EPS was $1.28, down 41.6 percent, due almost entirely to the negative 90-cent impact of cycling the prior year's arbitration award4.

Organic Net Revenue1

                                 
 

Quarter 4

   

Full Year

 

Reported
Net Revenues

 

vs PY

 

Organic
Net
Revenue Growth

 

Power Brand Growth

   

Reported
Net Revenues

 

vs PY

 

Organic
Net
Revenue Growth

 

Power Brand Growth

                                 

Latin America

$ 1,240

 

(7.3)%

 

15.3 %

 

18.1 %

   

$ 5,153

 

(4.3)%

 

15.1 %

 

14.5 %

Asia Pacific

1,145

 

(5.3)

 

(1.1)

 

2.2

   

4,605

 

(7.0)

 

(2.8)

 

(2.2)

Eastern Europe, Middle East & Africa

898

 

(15.7)

 

6.3

 

14.3

   

3,638

 

(7.1)

 

6.5

 

11.3

Europe

3,761

 

(6.7)

 

1.1

 

1.8

   

13,912

 

(1.0)

 

(1.0)

 

0.5

North America

1,786

 

(3.1)

 

(1.5)

 

(0.8)

   

6,936

 

(0.8)

 

0.8

 

2.2

Mondelēz International

$ 8,830

 

(6.9)%

 

2.9 %

 

5.2 %

   

$ 34,244

 

(3.0)%

 

2.4 %

 

4.1 %

                                 
                                 

 

Full Year Commentary

Organic Net Revenue increased 2.4 percent, driven by strong pricing performance (up 4.5 percentage points), which more than offset unfavorable volume/mix (down 2.1 percentage points).  The decline in volume/mix was largely due to price elasticity, a slow response by competitors to higher input costs and the impact of significant price-related customer disruptions that are largely resolved.   Organic Net Revenue from emerging markets5 was up 7.0 percent, while developed markets6 decreased 0.5 percent.  Overall, Power Brands grew 4.1 percent.

Operating Income and Diluted EPS

 

$ in millions

Reported

   

Q4

 

vs PY

         

FY

 

vs PY

   
 

Gross Profit

$ 3,146

 

(9.9)%

         

$ 12,597

 

(3.9)%

   
 

Gross Profit Margin

35.6 %

 

(1.2)pp

         

36.8 %

 

(0.3)pp

   
                             
 

Operating Income

$ 589

 

(41.7)%

         

$ 3,242

 

(18.4)%

   
 

Operating Income Margin

6.7 %

 

(3.9)pp

         

9.5 %

 

(1.7)pp

   
                             
 

Net Earnings7

$ 500

 

(71.7)%

         

$ 2,184

 

(44.2)%

   
                             
 

Diluted EPS

$ 0.29

 

(71.0)%

         

$ 1.28

 

(41.6)%

   
                             
   

Adjusted1

   

Q4

 

vs PY
(Rpt Fx)

   

vs PY
(Cst Fx)

   

FY

 

vs PY
(Rpt Fx)

 

vs PY
(Cst Fx)

 

Gross Profit

$ 3,148

 

(10.5)%

   

(1.1)%

   

$ 12,609

 

(4.2)%

 

0.6 %

 

Gross Profit Margin

35.7 %

 

(1.4)pp

         

36.8 %

 

(0.6)pp

   
                             
 

Operating Income

$ 1,165

 

(11.3)%

   

0.1 %

   

$ 4,416

 

3.5 %

 

10.2 %

 

Operating Income Margin

13.2 %

 

(0.7)pp

         

12.9 %

 

0.8 pp

   
                             
 

Net Earnings

$ 791

 

6.6 %

         

$ 3,001

 

8.9 %

   
                             
 

Diluted EPS

$ 0.47

 

11.9 %

   

26.2 %

   

$ 1.76

 

14.3 %

 

23.4 %

 

 

Full Year Commentary

Adjusted Gross Profit1 increased 0.6 percent on a constant-currency basis.  Adjusted Gross Profit margin was 36.8 percent, down 0.6 percentage points, including a negative 0.5 percentage point impact from the mark-to-market adjustments associated with commodities and currency hedging.  Excluding this impact, Adjusted Gross Profit margin was essentially flat as higher prices and a strong contribution from supply chain productivity offset input cost inflation. 

Adjusted Operating Income grew 10.2 percent on a constant-currency basis.  Adjusted Operating Income margin expanded 0.8 percentage points to 12.9 percent, driven primarily by strong gains in Europe and North America.  The company continued to reduce overheads in all regions.  In addition, the company maintained working media support while lowering overall advertising and consumer expense by driving efficiencies through consolidating providers, reducing non-working costs and shifting spending to lower-cost, digital outlets.

Adjusted EPS grew 23.4 percent on a constant-currency basis, driven by operating gains, lower interest expense and share repurchases.

Free Cash Flow, Share Repurchases and Dividends

For the full year, Free Cash Flow excluding items1 was $2.5 billion, driven by earnings growth and working capital improvement.  The company returned $2.9 billion to shareholders through $1.9 billion of share repurchases and $1 billion in dividends.

Outlook

In 2015, the company expects Organic Net Revenue growth of at least 2 percent, after accounting for the company's strategic decision to exit certain lower-margin revenue.  Adjusted Operating Income margin is expected to be approximately 14 percent for the year, with margin expansion accelerating in the second half, driven by the timing of cost-reduction programs.  Adjusted EPS is expected to increase at a double-digit rate on a constant-currency basis. 

With approximately 80 percent of revenues in currencies not tied to the strengthening U.S. dollar, the company estimates foreign exchange translation to reduce 2015 net revenue growth by approximately 11 percentage points and Adjusted EPS by approximately $0.308.     

Conference Call

Mondelez International will host a conference call for investors with accompanying slides to review its results at 10 a.m. ET today.  Investors and analysts may participate via phone by calling
1-800-322-9079 from the United States and 1-973-582-2717 from other locations.  Access to a live audio webcast with accompanying slides and a replay of the event will be available at www.mondelezinternational.com/Investor.  The company will be live tweeting from the event at www.twitter.com/MDLZ.

About Mondelez International

Mondelez International, Inc. (NASDAQ: MDLZ) is a global snacking powerhouse, with 2014 revenue of $34 billion. Creating delicious moments of joy in 165 countries, Mondelez International is a world leader in biscuits, chocolate, gum, candy, coffee and powdered beverages, with billion-dollar brands such as Oreo, LU and Nabisco biscuits; Cadbury, Cadbury Dairy Milk and Milka chocolate; Trident gum; Jacobs coffee and Tang powdered beverages. Mondelez International is a proud member of the Standard and Poor's 500, NASDAQ 100 and Dow Jones Sustainability Index. Visit www.mondelezinternational.com or follow us on Twitter at www.twitter.com/MDLZ.

End Notes

  1. Organic Net Revenue, Adjusted Operating Income, Adjusted EPS, Adjusted Gross Profit and Free Cash Flow excluding items are non-GAAP financial measures. Please see discussion of non-GAAP financial measures at the end of this press release for more information.
  2. Includes both the 2012-2014 Restructuring Program and the 2014-2018 Restructuring Program.  Please see discussion of non-GAAP financial measures at the end of this press release for more details about both programs.
  3. In August 2013,  the company recorded a $363 million favorable impact related to the resolution of a Cadbury acquisition tax indemnification, including $336 million in selling, general and administrative expenses and $49 million in interest and other expense, net partially offset by $22 million of tax expense.
  4. On December 13, 2013, the independent arbitrator in the dispute between Kraft Foods Group and Starbucks Coffee Company issued a decision and Final Award that Starbucks must pay $2.8 billion in total cash compensation for its unilateral termination of the companies' license and supply agreement.  The company recorded a gain, net of taxes, of $1.6 billion during the fourth quarter of 2013.
  5. Emerging markets consist of the Latin America and Eastern Europe, Middle East and Africa regions in their entirety; the Asia Pacific region, excluding Australia, New Zealand and Japan; and the following countries from the Europe region: Poland, Czech & Slovak Republics, Hungary, Bulgaria, Romania, the Baltics and the East Adriatic countries.
  6. Developed markets include the entire North America region, the Europe region excluding the countries included in the emerging markets definition, and Australia, New Zealand and Japan from the Asia Pacific region.
  7. Net earnings attributable to Mondelez International.
  8. Currency estimate is based on spot rates as of the close of business on January 30, 2015.

Forward-Looking Statements

This press release contains a number of forward-looking statements. Words, and variations of words, such as "will," "expect," "intend," "would," "estimate," "achieve," "drive," "positioned," "target," "outlook" and similar expressions are intended to identify our forward-looking statements, including, but not limited to, statements about: our future performance, including our future revenue growth, earnings per share and margins; consumer demand; currency and the effect of foreign exchange translation on our results of operations; category growth; the timing of cost-reduction programs; the costs of, timing of expenditures under and completion of our restructuring programs; the cash proceeds and ownership interest to be received in the coffee transactions; completion of our biscuit operation acquisition; and our Outlook, including 2015 Organic Net Revenue growth, Adjusted Operating Income margin and Adjusted EPS. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control, which could cause our actual results to differ materially from those indicated in our forward-looking statements. Such factors include, but are not limited to, risks from operating globally and in emerging markets, changes in currency exchange rates, continued volatility of commodity and other input costs, pricing actions, weakness in economic conditions, weakness in consumer spending, unanticipated disruptions to our business, competition, the restructuring programs and our other transformation initiatives not yielding the anticipated benefits, changes in the assumptions on which the restructuring programs are based, failing to successfully complete the coffee transactions on the anticipated time frame and tax law changes. Please also see our risk factors, as they may be amended from time to time, set forth in our filings with the SEC, including our most recently filed Annual Report on Form 10-K. Mondelez International disclaims and does not undertake any obligation to update or revise any forward-looking statement in this press release, except as required by applicable law or regulation.

                           

Schedule 1

Mondelez International, Inc. and Subsidiaries

Condensed Consolidated Statements of Earnings

(in millions of U.S. dollars, except per share data)  (Unaudited)

                             
     

For the Three Months Ended December 31

       

For the Twelve Months Ended December 31

   
     

2014

 

2013

 

% Change
Fav / (Unfav)

   

2014

 

2013

 

% Change
Fav / (Unfav)

                             

Net revenues

 

$     8,830

 

$     9,488

 

(6.9)%

   

$   34,244

 

$   35,299

 

(3.0)%

Cost of sales

 

5,684

 

5,995

 

5.2 %

   

21,647

 

22,189

 

2.4 %

 

Gross profit

 

3,146

 

3,493

 

(9.9)%

   

12,597

 

13,110

 

(3.9)%

                             
 

Gross profit margin

 

35.6%

 

36.8%

       

36.8%

 

37.1%

   
                             

Selling, general and administrative expenses

 

2,101

 

2,294

 

8.4 %

   

8,457

 

8,679

 

2.6 %

Asset impairment and exit costs

 

407

 

138

 

(100.0+)%

   

692

 

273

 

(100.0+)%

Gains on acquisition and divestitures, net

 

-

 

(2)

 

(100.0)%

   

-

 

(30)

 

(100.0)%

Amortization of intangibles

 

49

 

53

 

7.5 %

   

206

 

217

 

5.1 %

                             
 

Operating income

 

589

 

1,010

 

(41.7)%

   

3,242

 

3,971

 

(18.4)%

                             
 

Operating income margin

 

6.7%

 

10.6%

       

9.5%

 

11.2%

   
                             

Interest and other expense, net

 

(29)

 

847

 

100.0+%

   

688

 

1,579

 

56.4 %

 

Earnings before income taxes

 

618

 

163

 

100.0+%

   

2,554

 

2,392

 

6.8 %

                             

Provision / (benefit) for income taxes

 

111

 

(7)

 

(100.0+)%

   

353

 

60

 

(100.0+)%

                             

Effective tax rate

 

18.0%

 

(4.3)%

       

13.8%

 

2.5%

   
                             
 

Earnings from continuing operations

 

507

 

170

 

100.0+%

   

$        2,201

 

$        2,332

 

(5.6)%

                             

Earnings from discontinued operations, net of income taxes

 

-

 

1,603

 

(100.0)%

   

-

 

1,603

 

(100.0)%

                             
 

Net earnings

 

507

 

1,773

 

(71.4)%

   

2,201

 

3,935

 

(44.1)%

Noncontrolling interest

 

7

 

7

 

-

   

17

 

20

 

15.0%

 

Net earnings attributable to Mondelez International

 

$         500

 

$      1,766

 

(71.7)%

   

$       2,184

 

$       3,915

 

(44.2)%

                             

Per share data:

                         
 

Basic earnings per share attributable to Mondelez International:

                         
 

-  Continuing operations

 

$         0.30

 

$         0.10

 

100.0+%

   

$         1.29

 

$         1.30

 

(0.8)%

 

-  Discontinued operations

 

-

 

0.91

 

(100.0)%

   

-

 

0.91

 

(100.0)%

 

Basic earnings per share attributable to Mondelez International

 

$         0.30

 

$         1.01

 

(70.3)%

   

$         1.29

 

$         2.21

 

(41.6)%

                             
 

Diluted earnings per share attributable to Mondelez International:

                         
 

-  Continuing operations

 

$         0.29

 

$         0.09

 

100.0+%

   

$         1.28

 

$         1.29

 

(0.8)%

 

-  Discontinued operations

 

-

 

0.91

 

(100.0)%

   

-

 

0.90

 

(100.0)%

 

Diluted earnings per share attributable to Mondelez International

 

$         0.29

 

$         1.00

 

(71.0)%

   

$         1.28

 

$         2.19

 

(41.6)%

                             

Average shares outstanding:

                         
 

Basic

 

1,677

 

1,743

 

3.8 %

   

1,691

 

1,774

 

4.7 %

 

Diluted

 

1,695

 

1,761

 

3.7 %

   

1,709

 

1,789

 

4.5 %

 

 

 

         

Schedule 2

Mondelez International, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in millions of U.S. dollars)  (Unaudited)

           
 

December 31,

 

December 31,

   
 

2014

 

2013

   

ASSETS

         

Cash and cash equivalents

$        1,631

 

$        2,622

   

Receivables, net

4,708

 

5,403

   

Inventories, net

3,480

 

3,743

   

Deferred income taxes

480

 

517

   

Other current assets

1,408

 

889

   

Total current assets

11,707

 

13,174

   
           

Property, plant and equipment, net

9,827

 

10,247

   

Goodwill

23,389

 

25,597

   

Intangible assets, net

20,335

 

21,994

   

Prepaid pension assets

53

 

54

   

Other assets

1,461

 

1,449

   
           

      TOTAL ASSETS

$      66,772

 

$      72,515

   
           

LIABILITIES AND EQUITY

         

Short-term borrowings

$        1,305

 

$        1,594

   

Current portion of long-term debt

1,530

 

1,003

   

Accounts payable

5,299

 

5,345

   

Accrued marketing

2,047

 

2,318

   

Accrued employment costs

946

 

1,043

   

Other current liabilities

2,837

 

3,051

   

Total current liabilities

13,964

 

14,354

   
           

Long-term debt

13,865

 

14,482

   

Deferred income taxes

5,512

 

6,282

   

Accrued pension costs

2,912

 

1,962

   

Accrued postretirement health care costs

526

 

412

   

Other liabilities

2,140

 

2,491

   
           

      TOTAL LIABILITIES

38,919

 

39,983

   
           

      TOTAL EQUITY

27,853

 

32,532

   
           

      TOTAL LIABILITIES AND EQUITY

$      66,772

 

$      72,515

   
           
           
 

December 31,

 

December 31,

   
 

2014

 

2013

 

Incr/(Decr)

           

Short-term borrowings

$              1,305

 

$              1,594

 

$                (289)

Current portion of long-term debt

1,530

 

1,003

 

527

Long-term debt

13,865

 

14,482

 

(617)

Total Debt

16,700

 

17,079

 

(379)

           

Cash and cash equivalents

1,631

 

2,622

 

(991)

           

Net Debt (1)

$            15,069

 

$            14,457

 

$                 612

           

(1)

Net debt is defined as total debt, which includes short-term borrowings, current portion of long-term debt and long-term debt, less cash and cash equivalents.

 

 

 

 

   

 

Schedule 3

Mondelez International, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in millions of U.S. dollars)

(Unaudited)

   
 

 For the Twelve Months
Ended December 31

 

2014

 

2013

CASH PROVIDED BY / (USED IN) OPERATING ACTIVITIES

     

    Net earnings 

$    2,201

 

$   3,935

    Adjustments to reconcile net earnings to operating cash flows:

     

        Depreciation and amortization

1,059

 

1,077

        Stock-based compensation expense

141

 

128

        Deferred income tax benefit

(186)

 

(64)

        Gains on acquisition and divestitures, net

-

 

(30)

        Asset impairments

240

 

97

        Benefit from indemnification resolution

-

 

(385)

        Loss on early extinguishment of debt

493

 

608

        Unrealized gain on planned coffee business divestiture currency hedge

(628)

 

-

        Other non-cash items, net

(184)

 

(19)

Change in assets and liabilities, net of acquisitions and divestitures:

     

            Receivables, net

184

 

492

            Inventories, net

(188)

 

(116)

            Accounts payable

387

 

793

            Other current assets

(86)

 

(42)

            Other current liabilities

135

 

62

        Change in pension and postretirement assets and liabilities, net

(6)

 

(126)

            Net cash provided by operating activities

3,562

 

6,410

       

CASH PROVIDED BY / (USED IN) INVESTING ACTIVITIES

     

    Capital expenditures

(1,642)

 

(1,622)

    Acquisition, net of cash received

(7)

 

(119)

    Proceeds from divestitures, net of disbursements

-

 

60

    Cash received from Kraft Foods Group related to the Spin-Off

-

 

55

    Proceeds from sale of property, plant and equipment and other

7

 

143

            Net cash used in investing activities

(1,642)

 

(1,483)

       

CASH PROVIDED BY / (USED IN) FINANCING ACTIVITIES

     

    Issuances of commercial paper, maturities greater than 90 days

2,082

 

1,329

    Repayments of commercial paper, maturities greater than 90 days

(2,713)

 

(607)

    Net issuances of other short-term borrowings, net

398

 

613

    Long-term debt proceeds

3,032

 

3,248

    Long-term debt repaid

(3,017)

 

(7,559)

    Repurchase of Common Stock

(1,700)

 

(2,900)

    Dividends paid

(964)

 

(943)

    Other

194

 

132

            Net cash used in financing activities

(2,688)

 

(6,687)

       

Effect of exchange rate changes on cash and cash equivalents

(223)

 

(93)

       

Cash and cash equivalents:

     

    Increase / (decrease)

(991)

 

(1,853)

    Balance at beginning of period

2,622

 

4,475

    Balance at end of period

$    1,631

 

$   2,622

Mondelez International, Inc. and Subsidiaries
Reconciliation of GAAP and Non-GAAP Financial Measures
(Unaudited)

The company reports its financial results in accordance with accounting principles generally accepted in the United States ("GAAP" or referred to herein as "Reported").  However, management believes that certain non-GAAP financial measures should be considered when assessing the company's ongoing performance to provide more complete information on the factors and trends affecting the company's business.  Management also uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating the company's performance.  Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the company's Reported results prepared in accordance with GAAP.  In addition, the non-GAAP measures the company uses may differ from non-GAAP measures used by other companies.  Because GAAP financial measures on a forward-looking basis are neither accessible nor deemed to be significantly different from the non-GAAP financial measures, and reconciling information is not available without unreasonable effort, the company has not provided that information with regard to the non-GAAP financial measures in the company's Outlook.

DEFINITIONS OF THE COMPANY'S NON-GAAP FINANCIAL MEASURES

The company's non-GAAP financial measures and corresponding metrics reflect how the company evaluates its operating results currently and provide improved comparability of operating results.  As new events or circumstances arise, these definitions could change over time:

  • "Organic Net Revenue" is defined as net revenues excluding the impact of acquisitions, divestitures (including businesses under sales agreements and exits of major product lines under a sale or licensing agreement), Integration Program costs, accounting calendar changes and currency rate fluctuations.
  • "Adjusted Gross Profit" is defined as gross profit excluding the impacts of pension costs related to obligations transferred in the Spin-Off, the 2012-2014 Restructuring Program, the Integration Program and other acquisition integration costs and the operating results of divestitures (including businesses under sales agreements and exits of major product lines under a sale or licensing agreement).  The company also evaluates growth in the company's Adjusted Gross Profit on a constant currency basis.
  • "Adjusted Operating Income" and "Adjusted Segment Operating Income" are defined as operating income (or segment operating income) excluding the impacts of Spin-Off Costs, pension costs related to the obligations transferred in the Spin-Off, the 2012-2014 Restructuring Program, the 2014-2018 Restructuring Program, the Integration Program and other acquisition integration costs, the remeasurement of net monetary assets in Venezuela, the benefit from the Cadbury acquisition-related indemnification resolution, incremental costs associated with the JDE coffee transactions, impairment charges related to goodwill and intangible assets, gains / losses from divestitures or acquisitions, acquisition-related costs and the operating results of divestitures (including businesses under sales agreements and exits of major product lines under a sale or licensing agreement).  The company also evaluates growth in the company's Adjusted Operating Income and Adjusted Segment Operating Income on a constant currency basis.
  • "Adjusted EPS"  is defined as diluted EPS attributable to Mondelez International from continuing operations excluding the impacts of Spin-Off Costs, pension costs related to the obligations transferred in the Spin-Off, the 2012-2014 Restructuring Program, the 2014-2018 Restructuring Program, the Integration Program and other acquisition integration costs, the remeasurement of net monetary assets in Venezuela, the net benefit from the Cadbury acquisition-related indemnification resolution, the loss on debt extinguishment and related expenses, the residual tax benefit impact from the resolution of the Starbucks arbitration, hedging gains / losses and incremental costs associated with the JDE coffee transactions, impairment charges related to goodwill and intangible assets, gains / losses from divestitures or acquisitions, acquisition-related costs and net earnings from divestitures (including businesses under sales agreements and exits of major product lines under a sale or licensing agreement), and including an interest expense adjustment related to the Spin-Off  transaction.  The company also evaluates growth in the company's Adjusted EPS on a constant currency basis.
  • "Free Cash Flow excluding items" is defined as Free Cash Flow (net cash provided by operating activities less capital expenditures) excluding taxes paid on the Starbucks arbitration award and cash payments associated with accrued interest and other related fees due to the company's completion of a $1.6 billion cash tender offer for some of its outstanding high coupon long-term debt on February 6, 2014.

See the attached schedules for supplemental financial data and corresponding reconciliations of the non-GAAP financial measures referred to above to the most comparable GAAP financial measures for the three and twelve months ended December 31, 2014 and 2013. 

SEGMENT OPERATING INCOME

The company uses segment operating income to evaluate segment performance and allocate resources.  The company believes it is appropriate to disclose this measure to help investors analyze segment performance and trends.  Segment operating income excludes unrealized gains and losses on hedging activities (which are a component of cost of sales), general corporate expenses (which are a component of selling, general and administrative expenses), amortization of intangibles, the benefit from the Cadbury acquisition-related indemnification resolution (which is a component of selling, general and administrative expenses), gains and losses on divestitures or acquisitions and acquisition-related costs (which are a component of selling, general and administrative expenses) in all periods presented.  The company excludes these items from segment operating income in order to provide better transparency of its segment operating results.  Furthermore, the company centrally manages interest and other expense, net.  Accordingly, the company does not present these items by segment because they are excluded from the segment profitability measure that management reviews.

ITEMS IMPACTING COMPARABILITY OF OPERATING RESULTS

The following information is provided to give qualitative and quantitative information related to items impacting comparability of operating results.  The company determines which items to consider as "items impacting comparability" based on how management views the company's business; makes financial, operating and planning decisions; and evaluates the company's ongoing performance.  In addition, the company provides the impact that changes in currency exchange rates had on the company's financial results (referred to as "constant currency").

Divestitures
The company excludes the operating results of businesses divested, including businesses under sales agreements and exits of major product lines under a sale or licensing agreement.  The company did not divest any businesses during the three months and twelve months ended December 31, 2014.  In 2013, the company completed several divestitures primarily in the company's EEMEA and Europe segments. These divestitures included a salty snacks business in Turkey, a confectionery business in South Africa and a chocolate business in Spain.  In addition, the company exited a major product line under a licensing agreement in the company's North America segment.   In connection with the divestitures in Turkey and South Africa, the company recognized a pre-tax gain of $8 million during the twelve months ended December 31, 2013.

Acquisition
On February 22, 2013, the company acquired the remaining interest in a biscuit operation in Morocco, which is now a wholly-owned subsidiary within the company's EEMEA segment.  The company recorded a pre-tax gain of $22 million during the three months ended March 31, 2013 related to the remeasurement of the company's previously-held equity interest in the operation to fair value in accordance with GAAP.  For 2014, only the operating results for the period prior to the anniversary date of the acquisition are noted as an item impacting comparability.   

Accounting Calendar Change
In connection with moving toward a common consolidation date across the company, in the first quarter of 2013, the company changed the consolidation date for the Europe segment. Previously, this segment primarily reported results as of the last Saturday of each period. Subsequent to the change, the company's Europe segment reports results as of the last calendar day of the period. At this time, the majority of the company's operating subsidiaries report results as of the last calendar day of the period. The company's North American operating subsidiaries report results as of the last Saturday of the period and beginning in the first quarter of 2015 reports as of the last calendar day of the period. The change in the consolidation date for the Europe segment had a favorable impact of $19 million on net revenues for the three months and $38 million for the twelve months ended December 31, 2013, respectively.

Integration Program and other acquisition integration costs
Integration Program costs

Integration Program costs are defined as the costs associated with combining the Mondelez International and Cadbury businesses, and are separate from those costs associated with completing the acquisition. At the end of 2013, the company completed incurring charges related to the Integration Program.  The company recorded reversals to the Integration Program of $2 million in the three months and $8 million in the twelve months ended December 31, 2014 related to accruals no longer required.    The company recorded charges of $107 million during the three months and $216 million during the twelve months ended December 31, 2013 in selling, general and administrative expenses within its Europe, Asia Pacific, Latin America and EEMEA segments.

Other acquisition integration costs

In connection with the acquisition of a biscuit operation in Morocco in February 2013, the company recorded integration charges of $1 million for the three months and $4 million for the twelve months ended December 31, 2014 and $3 million for the three months and $4 million for the twelve months ended December 31, 2013. The company recorded these charges in selling, general and administrative expenses within the company's EEMEA segment.

Spin-Off Costs
On October 1, 2012, the company completed the Spin-Off of its North American grocery business, Kraft Foods Group, Inc. ("Kraft Foods Group"), to its shareholders (the "Spin-Off"). Following the Spin-Off, Kraft Foods Group is an independent public company and the company does not beneficially own any shares of Kraft Foods Group common stock. In 2014, the company concluded its Spin-Off transition plans.  Historically the company has incurred Spin-Off transaction, transition and financing and related costs ("Spin-Off Costs") in its operating results. Within selling, general and administrative expenses, the company recorded $12 million of pre-tax Spin-Off Costs in the three months and $35 million in the twelve months ended December 31, 2014 and $29 million in the three months and $62 million in the twelve months ended December 31, 2013.

2012-2014 Restructuring Program
In 2012, the company's Board of Directors approved $1.5 billion of restructuring and related implementation costs ("2012-2014 Restructuring Program") reflecting primarily severance, asset disposals and other manufacturing-related one-time costs.  The primary objective of the restructuring and implementation activities was to ensure that both Mondelez International and Kraft Foods Group were each set up to operate efficiently and execute on their respective business strategies upon separation and in the future.  Of the $1.5 billion of anticipated 2012-2014 Restructuring Program costs, the company retained approximately $925 million and Kraft Foods Group retained the balance of the program. Through the end of 2014, the company has incurred total restructuring and implementation costs of $905 million and does not expect to incur additional charges on the 2012-2014 Restructuring Program.

Restructuring costs

The company recorded within asset impairment and exit costs charges of $108 million in the three months and $367 million in the twelve months ended December 31, 2014 as compared to $136 million in the three months and $267 million in the twelve months ended December 31, 2013. These charges were related to asset write-downs (including accelerated depreciation and asset impairments), severance and other related costs.

Implementation costs

Implementation costs are directly attributable to restructuring activities; however, they do not qualify for accounting treatment as exit or disposal activities. The company recorded implementation costs of $32 million in the three months and $98 million in the twelve months ended December 31, 2014 as compared to $32 million in the three months and $63 million in the twelve months ended December 31, 2013. Implementation costs primarily include costs to reorganize the company's operations and facilities, the discontinuance of certain product lines and the incremental expenses related to the closure of facilities, replicating the company's information systems infrastructure and reorganizing costs related to the company's sales function.

Acquisition-related costs
On November 11, 2014, the Company announced the pending acquisition of a biscuit operation in Vietnam. The biscuit operation will become a wholly-owned subsidiary within the company's Asia Pacific segment. The company expects to close the transaction in mid-2015 after regulatory and other matters are resolved. The company recorded $2 million in acquisition-related costs during the three months ended December 31, 2014, which was recorded in selling, general and administrative expenses.

In connection, with the acquisition of the biscuit operation in Morocco in February 2013, the company recorded a total of $7 million in acquisition-related costs during the three months ended March 31, 2013, of which $5 million was recorded in interest and other expense, net and $2 million in selling, general and administrative expenses.

Net benefit from Indemnification Resolution
As part of the 2010 Cadbury acquisition, the company became the responsible party for tax matters under the Cadbury Schweppes Plc and Dr Pepper Snapple Group, Inc. ("DPSG") Tax Sharing and Indemnification Agreement dated May 1, 2008 ("Tax Indemnity") for certain 2007 and 2008 transactions relating to the demerger of Cadbury's Americas Beverage business. A U.S. federal tax audit of DPSG for the 2006-2008 tax years was concluded with the IRS in August 2013. As a result, the company recorded a favorable impact of $336 million in selling, general and administrative expenses and $49 million in interest and other expense, net for a total pre-tax impact of $385 million ($363 million net of tax) in the three months ended September 30, 2013 due to the reversal of the accrued liability in excess of the amount paid to DPSG under the Tax Indemnity in the third quarter of 2013. 

Remeasurement of Venezuelan net monetary assets
As a result of recent Venezuelan currency exchange developments and the expected impact on the company's Venezuelan operations, the company remeasured its Venezuelan bolivar-denominated net monetary assets as of March 31, 2014 from the official exchange rate of 6.30 to the then-prevailing SICAD I exchange rate of 10.70 bolivars to the U.S. dollar. The company recognized a $142 million currency remeasurement pre-tax charge within selling, general & administrative expenses.  Through December 2014, the company recognized $25 million of additional remeasurement charges in operating income related primarily to changes in the SICAD I rate.  While the remeasurement loss is non-deductible, a $16 million net tax benefit for 2014 was recognized due to a Venezuelan tax impact related to a local deduction for the loss on certain U.S. dollar denominated liabilities partially offset by the tax impact due to interest deductibility limitations resulting from Venezuela's lower earnings.  As of December 31, 2014, the company's remaining bolivar-denominated net monetary assets were approximately $236 million.  The company's Venezuela net revenues were approximately $760 million or 2.2% of consolidated net revenues for the year ended December 31, 2014.

During the three months ended March 31, 2013, the company also recorded a $54 million currency remeasurement pre-tax charge related to the devaluation of the company's net monetary assets in Venezuela at that time.  In addition, due to the company's underlying legal structure, higher taxes of $5 million were recorded due primarily to interest deductibility limitations resulting from Venezuela's lower earnings.  As described in the company's Form 8-K dated April 22, 2014, this 2013 remeasurement charge was previously included in the company's non-GAAP financial measures of Adjusted Operating Income and Adjusted Earnings Per Share.  This charge is now excluded from these non-GAAP financial measures.

The company continues to monitor developments in the currency and actively manage its investment and exposures in Venezuela.  If any of the rates, or application of the rates to the company's business, were to change, the company would recognize additional currency losses or gains, which could be significant.  

Loss on debt extinguishment and related costs
On February 6, 2014, the company completed a $1.6 billion cash tender offer for some of its outstanding high coupon long term debt.  The company recorded a pre-tax loss on debt extinguishment and related expenses of $495 million during the three months ended March 31, 2014 for the amount paid in excess of the carrying value of the debt and from recognizing unamortized financing discounts and deferred financing costs.

On December 18, 2013, the company completed a $3.4 billion cash tender offer for some of its outstanding high coupon long term debt.  The company recorded a pre-tax loss on debt extinguishment and related expenses of $612 million during the three months ended December 31, 2013 for the amount paid in excess of the carrying value of the debt and from recognizing unamortized financing discounts and deferred financing costs.

2014-2018 Restructuring Program
On May 6, 2014, the company's Board of Directors approved a $3.5 billion restructuring program, comprised of approximately $2.5 billion in cash costs and $1 billion in non-cash costs ("2014-2018 Restructuring Program"), and up to $2.2 billion of capital expenditures. The primary objective of the 2014-2018 Restructuring Program is to reduce the company's operating cost structure in both supply chain and overhead costs. The program is intended primarily to cover severance as well as asset disposals and other manufacturing-related one-time costs. The company expects to incur the majority of the program's charges in 2015 and 2016 and to complete the program by year-end 2018.

Restructuring costs
The company recorded within asset impairment and exit costs charges of $260 million in the three months and $286 million in the twelve months ended December 31, 2014. These charges were for asset write-downs (including accelerated depreciation and asset impairments), severance and other related costs.

Implementation costs
Implementation costs are directly attributable to restructuring activities; however, they do not qualify for special accounting treatment as exit or disposal activities. The company recorded implementation costs of $55 million in the three months and $106 million in the twelve months ended December 31, 2014. These costs primarily relate to reorganizing the company's operations and facilities in connection with its supply chain reinvention program and other identified productivity and cost saving initiatives. The costs include incremental expenses related to the closure of facilities, costs to terminate certain contracts and the simplification of the company's information systems.

Unrealized hedging gains / losses and incremental costs for the JDE coffee transactions
On May 7, 2014, the company announced that it entered into an agreement to combine the company's wholly owned coffee portfolio (outside of France) with D.E Master Blenders 1753 B.V. In conjunction with this transaction, Acorn Holdings B.V. ("AHBV"), owner of D.E Master Blenders 1753, has made a binding offer to receive the company's coffee business in France. The parties have also invited the company's partners in certain joint ventures to join the new company. The transactions remain subject to regulatory approvals and the completion of employee information and consultation requirements.

Upon completion of all proposed transactions, the company will receive cash of approximately €4 billion and a 49 percent equity interest in the new company, to be called Jacobs Douwe Egberts. AHBV will hold a majority share in the proposed combined company and will have a majority of the seats on the board, which will be chaired by current D.E Master Blenders 1753 Chairman Bart Becht. AHBV is owned by an investor group led by JAB Holding Company s.a r.l. The company will have certain minority rights.

Certain expenses related to readying the businesses for the planned transactions have been incurred. Within selling, general and administrative expenses, incremental costs were $62 million in the three months and $77 million in the twelve months ended December 31, 2014 and were incurred primarily in the company's Europe and EEMEA segments and general corporate expense. Within interest and other expense / (income), the company also recorded unrealized gains of $215 million in the three months and $628 million in the twelve months ended December 31, 2014 in connection with currency exchange forward contracts entered into to hedge the expected cash receipt of €4 billion upon closing.

Intangible Asset Impairment
During the 2014 review of non-amortizable intangible assets, the company recorded $58 million of impairment charges related to two trademarks in the three months ended December 31, 2014. In both cases, the impairments arose due to lower than expected product growth and decisions to redirect support for the products to other regional brands. The charges relate to a biscuit trademark in the company's Asia Pacific segment and a candy trademark in the company's Europe segment.

Constant currency
Management evaluates the operating performance of the company and its international subsidiaries on a constant currency basis. The company determines its constant currency operating results by dividing or multiplying, as appropriate, the current period local currency operating results by the currency exchange rates used to translate the company's financial statements in the comparable prior year period to determine what the current period U.S. dollar operating results would have been if the currency exchange rate had not changed from the comparable prior year period.

                     

Schedule 4

Mondelez International, Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP Measures

Net Revenues

(in millions of U.S. dollars)  (Unaudited)

                       
                       
 

Latin

America

 

Asia

Pacific

 

EEMEA

 

Europe

 

North

America

 

Mondelez

International

For the Three Months Ended December 31, 2014

                     

Reported (GAAP)

$    1,240

 

$     1,145

 

$         898

 

$     3,761

 

$     1,786

 

$         8,830

Divestitures

-

 

-

 

-

 

-

 

-

 

-

Currency

301

 

51

 

234

 

295

 

23

 

904

Organic (Non-GAAP)

$    1,541

 

$     1,196

 

$      1,132

 

$     4,056

 

$     1,809

 

$         9,734

                       

For the Three Months Ended December 31, 2013

                     

Reported (GAAP)

$    1,337

 

$     1,209

 

$      1,065

 

$     4,033

 

$     1,844

 

$         9,488

Divestitures

-

 

-

 

-

 

(2)

 

(8)

 

(10)

Accounting calendar change

-

 

-

 

-

 

(19)

 

-

 

(19)

Organic (Non-GAAP)

$    1,337

 

$     1,209

 

$      1,065

 

$     4,012

 

$     1,836

 

$         9,459

                       

% Change

                     

Reported (GAAP)

(7.3)%

 

(5.3)%

 

(15.7)%

 

(6.7)%

 

(3.1)%

 

(6.9)%

Divestitures

- pp

 

- pp

 

- pp

 

- pp

 

0.4 pp

 

0.1 pp

Accounting calendar change

-

 

-

 

-

 

0.5

 

-

 

0.2

Currency

22.6

 

4.2

 

22.0

 

7.3

 

1.2

 

9.5

Organic (Non-GAAP)

15.3 %

 

(1.1)%

 

6.3 %

 

1.1 %

 

(1.5)%

 

2.9 %

                       

Vol/Mix

(5.8)pp

 

(6.6)pp

 

(2.8)pp

 

(2.7)pp

 

(0.1)pp

 

(3.1)pp

Pricing

21.1

 

5.5

 

9.1

 

3.8

 

(1.4)

 

6.0

                       
                       
 

Latin

America

 

Asia

Pacific

 

EEMEA

 

Europe

 

North

America

 

Mondelez

International

For the Twelve Months Ended December 31, 2014

                     

Reported (GAAP)

$    5,153

 

$     4,605

 

$      3,638

 

$   13,912

 

$     6,936

 

$       34,244

Divestitures

-

 

-

 

-

 

-

 

-

 

-

Acquisitions

-

 

-

 

(14)

 

-

 

-

 

(14)

Currency

1,039

 

209

 

523

 

(36)

 

71

 

1,806

Organic (Non-GAAP)

$    6,192

 

$     4,814

 

$      4,147

 

$   13,876

 

$     7,007

 

$       36,036

                       

For the Twelve Months Ended December 31, 2013

                     

Reported (GAAP)

$    5,382

 

$     4,952

 

$      3,915

 

$   14,059

 

$     6,991

 

$       35,299

Divestitures

-

 

-

 

(20)

 

(11)

 

(39)

 

(70)

Accounting calendar change

-

 

-

 

-

 

(38)

 

-

 

(38)

Organic (Non-GAAP)

$    5,382

 

$     4,952

 

$      3,895

 

$   14,010

 

$     6,952

 

$       35,191

                       

% Change

                     

Reported (GAAP)

(4.3)%

 

(7.0)%

 

(7.1)%

 

(1.0)%

 

(0.8)%

 

(3.0)%

Divestitures

- pp

 

- pp

 

0.5 pp

 

- pp

 

0.6 pp

 

0.2 pp

Acquisitions

-

 

-

 

(0.3)

 

-

 

-

 

-

Accounting calendar change

-

 

-

 

-

 

0.2

 

-

 

0.1

Currency

19.4

 

4.2

 

13.4

 

(0.2)

 

1.0

 

5.1

Organic (Non-GAAP)

15.1 %

 

(2.8)%

 

6.5 %

 

(1.0)%

 

0.8 %

 

2.4 %

                       

Vol/Mix

(4.2)pp

 

(5.7)pp

 

0.8 pp

 

(2.3)pp

 

0.7 pp

 

(2.1)pp

Pricing

19.3

 

2.9

 

5.7

 

1.3

 

0.1

 

4.5

 

 

 

               

 

Schedule 5

Mondelez International, Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP Measures

Gross Profit / Operating Income

(in millions of U.S. dollars) (Unaudited)

                   
                   
 

For the Three Months Ended December 31, 2014

 

Net

Revenues

 

Gross

Profit

 

Gross

 Profit

Margin

 

Operating

Income

 

Operating
Income 
margin

Reported (GAAP)

$  8,830

 

$  3,146

 

35.6%

 

$     589

 

6.7%

Integration Program and other acquisition integration costs

-

 

-

     

(1)

   

Spin-Off Costs

-

 

(2)

     

12

   

2012-2014 Restructuring Program

-

 

2

     

134

   

Acquisition-related costs

-

 

-

     

2

   

Remeasurement of net monetary assets in Venezuela

-

 

-

     

6

   

2014-2018 Restructuring Program

-

 

2

     

304

   

Costs associated with the JDE coffee transactions

-

 

-

     

62

   

Intangible asset impairment

-

 

-

     

57

   

Adjusted (Non-GAAP)

$  8,830

 

$  3,148

 

35.7%

 

$  1,165

 

13.2%

Currency

   

333

     

149

   

Adjusted @ Constant FX (Non-GAAP)

   

$  3,481

     

$  1,314

   
                   
                   
 

For the Three Months Ended December 31, 2013

 

Net

Revenues

 

Gross

Profit

 

Gross

Profit

Margin

 

Operating

Income

 

Operating
Income 
margin

Reported (GAAP)

$  9,488

 

$  3,493

 

36.8%

 

$  1,010

 

10.6%

Integration Program and other acquisition integration costs

-

 

20

     

110

   

Spin-Off Costs

-

 

-

     

29

   

2012-2014 Restructuring Program

-

 

8

     

168

   

Gains on acquisition and divestitures, net

-

 

-

     

(2)

   

Divestitures

(10)

 

(3)

     

(2)

   

Adjusted (Non-GAAP)

$  9,478

 

$  3,518

 

37.1%

 

$  1,313

 

13.9%

Currency

   

-

     

-

   

Adjusted @ Constant FX (Non-GAAP)

   

$  3,518

     

$  1,313

   
                   
                   
     

Gross

Profit

     

Operating

Income

   

% Change - Reported (GAAP)

   

(9.9)%

     

(41.7)%

   

% Change - Adjusted (Non-GAAP)

   

(10.5)%

     

(11.3)%

   

% Change - Adjusted @ Constant FX (Non-GAAP)

   

(1.1)%

     

0.1 %

   
                   
                   
                   
 

For the Twelve Months Ended December 31, 2014

 

Net

Revenues

 

Gross

Profit

 

Gross

Profit Margin

 

Operating

Income

 

Operating
Income 
margin

Reported (GAAP)

$ 34,244

 

$ 12,597

 

36.8%

 

$  3,242

 

9.5%

Integration Program and other acquisition integration costs

-

 

-

     

(4)

   

Spin-Off Costs

-

 

(2)

     

35

   

2012-2014 Restructuring Program

-

 

11

     

459

   

Acquisition-related costs

-

 

-

     

2

   

Remeasurement of net monetary assets in Venezuela

-

 

-

     

167

   

2014-2018 Restructuring Program

-

 

3

     

381

   

Costs associated with the JDE coffee transactions

-

 

-

     

77

   

Intangible asset impairment

-

 

-

     

57

   

Adjusted (Non-GAAP)

$ 34,244

 

$ 12,609

 

36.8%

 

$  4,416

 

12.9%

Currency

   

636

     

287

   

Adjusted @ Constant FX (Non-GAAP)

   

$ 13,245

     

$  4,703

   
                   
                   
 

For the Twelve Months Ended December 31, 2013

 

Net

Revenues

 

Gross

Profit

 

Gross

Profit Margin

 

Operating

Income

 

Operating

Income 

margin

Reported (GAAP)

$ 35,299

 

$ 13,110

 

37.1%

 

$  3,971

 

11.2%

Integration Program and other acquisition integration costs

-

 

58

     

220

   

Spin-Off Costs

-

 

-

     

62

   

2012-2014 Restructuring Program

-

 

10

     

330

   

Acquisition-related costs

-

 

-

     

2

   

Net benefit from indemnification resolution

-

 

-

     

(336)

   

Remeasurement of net monetary assets in Venezuela

-

 

-

     

54

   

Gains on acquisition and divestitures, net

-

 

-

     

(30)

   

Divestitures

(70)

 

(18)

     

(6)

   

Adjusted (Non-GAAP)

$ 35,229

 

$ 13,160

 

37.4%

 

$  4,267

 

12.1%

Currency

   

-

     

-

   

Adjusted @ Constant FX (Non-GAAP)

   

$ 13,160

     

$  4,267

   
                   
                   
     

Gross

Profit

     

Operating

Income

   

% Change - Reported (GAAP)

   

(3.9)%

     

(18.4)%

   

% Change - Adjusted (Non-GAAP)

   

(4.2)%

     

3.5 %

   

% Change - Adjusted @ Constant FX (Non-GAAP)

   

0.6 %

     

10.2 %

   

 

 

 

                             

Schedule 6

Mondelez International, Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP Measures

Condensed Consolidated Statements of Earnings

(in millions of U.S. dollars, except per share data)  (Unaudited)

                               
                               
 

For the Three Months Ended December 31, 2014

 

Operating Income

 

Interest and other expense / (income)

 

Earnings before taxes

 

Income taxes

 

Effective tax rate

 

Non-controlling interest

 

Net Earnings attributable to Mondelez International

 

Diluted EPS attributable to Mondelez International

Reported (GAAP)

$        589

 

$         (29)

 

$          618

 

$        111

 

18.0 %

 

$            7

 

$                500

 

$           0.29

Integration Program and other acquisition integration costs

(1)

 

-

 

(1)

 

(1)

     

-

 

-

 

-

Spin-Off Costs

12

 

-

 

12

 

4

     

-

 

8

 

0.01

2012-2014 Restructuring Program

134

 

-

 

134

 

35

     

-

 

99

 

0.06

Acquisition-related costs

2

 

-

 

2

 

1

     

-

 

1

 

-

Remeasurement of net monetary assets in Venezuela

6

 

-

 

6

 

5

     

-

 

1

 

-

2014-2018 Restructuring Program

304

 

-

 

304

 

78

     

-

 

226

 

0.14

Income / (costs) associated with the JDE coffee transactions

62

 

215

 

(153)

 

(70)

     

-

 

(83)

 

(0.05)

Intangible asset impairment

57

 

-

 

57

 

18

     

-

 

39

 

0.02

Adjusted (Non-GAAP)

$     1,165

 

$        186

 

$          979

 

$        181

 

18.5 %

 

$            7

 

$                791

 

$           0.47

                               

Diluted Average Shares Outstanding

                           

1,695

                               
                               
 

For the Three Months Ended December 31, 2013

 

Operating Income

 

Interest and other expense / (income)

 

Earnings before taxes

 

Income taxes

 

Effective tax rate

 

Non-controlling interest

 

Net Earnings attributable to Mondelez International

 

Diluted EPS attributable to Mondelez International

Reported (GAAP)

$     1,010

 

$        847

 

$          163

 

$           (7)

 

(4.3)%

 

$            7

 

$                163

 

$           0.09

Integration Program and other acquisition integration costs

110

 

-

 

110

 

23

     

-

 

87

 

0.05

Spin-Off Costs

29

 

-

 

29

 

13

     

-

 

16

 

0.01

2012-2014 Restructuring Program

168

 

-

 

168

 

40

     

-

 

128

 

0.07

Loss on debt extinguishment and related expenses

-

 

(612)

 

612

 

224

     

-

 

388

 

0.22

Residual tax benefit due to resolution of Starbucks arbitration

-

 

-

 

-

 

36

     

-

 

(36)

 

(0.02)

Gains on acquisition and divestitures, net

(2)

 

-

 

(2)

 

-

     

-

 

(2)

 

-

Divestitures

(2)

 

-

 

(2)

 

-

     

-

 

(2)

 

-

Adjusted (Non-GAAP)

$     1,313

 

$        235

 

$       1,078

 

$        329

 

30.5 %

 

$            7

 

$                742

 

$           0.42

                               

Diluted Average Shares Outstanding

                           

1,761

                               
                               
 

For the Twelve Months Ended December 31, 2014

 

Operating Income

 

Interest and other expense / (income)

 

Earnings before taxes

 

Income taxes

 

Effective tax rate

 

Non-controlling interest

 

Net Earnings attributable to Mondelez International

 

Diluted EPS attributable to Mondelez International

Reported (GAAP)

$     3,242

 

$        688

 

$       2,554

 

$        353

 

13.8 %

 

$          17

 

$             2,184

 

$           1.28

Integration Program and other acquisition integration costs

(4)

 

-

 

(4)

 

(1)

     

-

 

(3)

 

-

Spin-Off Costs

35

 

-

 

35

 

13

     

-

 

22

 

0.01

2012-2014 Restructuring Program

459

 

-

 

459

 

107

     

-

 

352

 

0.21

Acquisition-related costs

2

 

-

 

2

 

1

     

-

 

1

 

-

Remeasurement of net monetary assets in Venezuela

167

 

-

 

167

 

16

     

-

 

151

 

0.09

Loss on debt extinguishment and related expenses

-

 

(495)

 

495

 

188

     

-

 

307

 

0.18

2014-2018 Restructuring Program

381

 

-

 

381

 

101

     

-

 

280

 

0.16

Income / (costs) associated with the JDE coffee transactions

77

 

628

 

(551)

 

(219)

     

-

 

(332)

 

(0.19)

Intangible asset impairment

57

 

-

 

57

 

18

     

-

 

39

 

0.02

Adjusted (Non-GAAP)

$     4,416

 

$        821

 

$       3,595

 

$        577

 

16.1 %

 

$          17

 

$             3,001

 

$           1.76

                               

Diluted Average Shares Outstanding

                           

1,709

                               
                               
 

For the Twelve Months Ended December 31, 2013

 

Operating Income

 

Interest and other expense / (income)

 

Earnings before taxes

 

Income taxes

 

Effective tax rate

 

Non-controlling interest

 

Net Earnings attributable to Mondelez International

 

Diluted EPS attributable to Mondelez International

Reported (GAAP)

$     3,971

 

$     1,579

 

$       2,392

 

$          60

 

2.5 %

 

$          20

 

$             2,312

 

$           1.29

Integration Program and other acquisition integration costs

220

 

-

 

220

 

45

     

-

 

175

 

0.10

Spin-Off Costs

62

 

-

 

62

 

23

     

-

 

39

 

0.02

2012-2014 Restructuring Program

330

 

-

 

330

 

82

     

-

 

248

 

0.14

Acquisition-related costs

2

 

(5)

 

7

 

-

     

-

 

7

 

-

Net benefit from indemnification resolution

(336)

 

49

 

(385)

 

(22)

     

-

 

(363)

 

(0.20)

Remeasurement of net monetary assets in Venezuela

54

 

-

 

54

 

(5)

     

-

 

59

 

0.03

Loss on debt extinguishment and related expenses

-

 

(612)

 

612

 

224

     

-

 

388

 

0.22

Residual tax benefit due to resolution of Starbucks arbitration

-

 

-

 

-

 

36

     

-

 

(36)

 

(0.02)

Gains on acquisition and divestitures, net

(30)

 

-

 

(30)

 

39

     

-

 

(69)

 

(0.04)

Divestitures

(6)

 

-

 

(6)

 

(2)

     

-

 

(4)

 

-

Adjusted (Non-GAAP)

$     4,267

 

$     1,011

 

$       3,256

 

$        480

 

14.7 %

 

$          20

 

$             2,756

 

$           1.54

                               

Diluted Average Shares Outstanding

                           

1,789

 

 

               

 

Schedule 7

Mondelez International, Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP Measures

Diluted EPS

(Unaudited)

                   
   

For the Three Months

Ended December 31,

   

For the Twelve Months

Ended December 31,

       
   

Diluted EPS

 

% Growth

   

Diluted EPS

 

% Growth

                   

2013 Diluted EPS Attributable to Mondelez International (GAAP)

 

$          1.00

       

$          2.19

   

Discontinued Operations

 

0.91

       

0.90

   
                   

2013 Diluted EPS Attributable to Mondelez International from

                 

Continuing Operations

 

0.09

       

1.29

   
                   

Integration Program and other acquisition integration costs

 

0.05

       

0.10

   

Spin-Off Costs

 

0.01

       

0.02

   

2012-2014 Restructuring Program costs

 

0.07

       

0.14

   

Acquisition-related costs

 

-

       

-

   

Net benefit from indemnification resolution

 

-

       

(0.20)

   

Loss on debt extinguishment and related expenses

 

0.22

       

0.22

   

Residual tax impact associated with Starbucks arbitration resolution

 

(0.02)

       

(0.02)

   

Remeasurement of net monetary assets in Venezuela

 

-

       

0.03

   

Gains on acquisition and divestitures, net

 

-

       

(0.04)

   
                   

2013 Adjusted EPS (Non-GAAP)

 

0.42

       

1.54

   
                   

Increase in operations

 

0.04

       

0.25

   

Gain on sale of property in 2013

 

(0.03)

       

(0.03)

   

VAT related benefits

 

0.04

       

0.04

   

Unrealized gains/(losses) on hedging activities

 

(0.04)

       

(0.07)

   

Lower interest and other expense, net

 

0.02

       

0.08

   

Changes in shares outstanding

 

0.02

       

0.08

   

Changes in income taxes

 

0.06

       

0.01

   
                   

2014 Adjusted EPS (Constant Currency) (Non-GAAP)

 

0.53

 

26.2%

   

1.90

 

23.4%

                   

Unfavorable foreign currency - translation

 

(0.06)

       

(0.14)

   
                   

2014 Adjusted EPS (Non-GAAP)

 

0.47

 

11.9%

   

1.76

 

14.3%

                   

Integration Program and other acquisition integration costs

 

-

       

-

   

Spin-Off Costs

 

(0.01)

       

(0.01)

   

2012-2014 Restructuring Program costs

 

(0.06)

       

(0.21)

   

Remeasurement of net monetary assets in Venezuela

 

-

       

(0.09)

   

Loss on debt extinguishment and related expenses

 

-

       

(0.18)

   

Intangible asset impairment charges

 

(0.02)

       

(0.02)

   

2014-2018 Restructuring Program costs

 

(0.14)

       

(0.16)

   

Income / (costs) associated with the JDE coffee transactions

 

0.05

       

0.19

   
                   

2014 Diluted EPS Attributable to Mondelez International (GAAP)

 

$          0.29

 

(71.0)%

   

$          1.28

 

(41.6)%

 

 

                                       

Schedule 8a

Mondelez International, Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP Measures

Segment Data

(in millions of U.S. dollars)  (Unaudited)

                                         
                                         
   

For the Three Months Ended December 31, 2014

   

Latin America

 

Asia Pacific

 

EEMEA

 

Europe

 

North America

 

Unrealized G/(L) on Hedging Activities

 

General Corporate Expenses

 

Amortization of Intangibles

 

Other Items

 

Mondelez International

Net Revenue

                                       

Reported (GAAP)

 

$    1,240

 

$ 1,145

 

$    898

 

$ 3,761

 

$ 1,786

 

$               -

 

$              -

 

$                   -

 

$            -

 

$         8,830

Divestitures

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

Adjusted (Non-GAAP)

 

$    1,240

 

$ 1,145

 

$    898

 

$ 3,761

 

$ 1,786

 

$               -

 

$              -

 

$                   -

 

$            -

 

$         8,830

                                         

Operating Income

                                       

Reported (GAAP)

 

$        171

 

$       21

 

$       24

 

$    476

 

$    178

 

$        (104)

 

$       (126)

 

$              (49)

 

$          (2)

 

$             589

Integration Program and other acquisition integration costs

-

 

(1)

 

1

 

-

 

-

 

-

 

(1)

 

-

 

-

 

(1)

Spin-Off Costs

 

-

 

-

 

-

 

-

 

-

 

-

 

12

 

-

 

-

 

12

2012-2014 Restructuring Program

 

3

 

11

 

31

 

30

 

55

 

-

 

4

 

-

 

-

 

134

Acquisition-related costs

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

2

 

2

Remeasurement of net monetary assets in Venezuela

 

6

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

6

2014-2018 Restructuring Program

 

63

 

21

 

20

 

114

 

61

 

-

 

25

 

-

 

-

 

304

Costs associated with the JDE coffee transactions

 

-

 

-

 

5

 

16

 

-

 

-

 

41

 

-

 

-

 

62

Intangible asset impairment

 

-

 

48

 

-

 

9

 

-

 

-

 

-

 

-

 

-

 

57

Adjusted (Non-GAAP)

 

$        243

 

$    100

 

$       81

 

$    645

 

$    294

 

$        (104)

 

$          (45)

 

$              (49)

 

$            -

 

$         1,165

Currency

 

71

 

7

 

30

 

50

 

5

 

-

 

(11)

 

(3)

 

-

 

149

Adjusted @ Constant FX (Non-GAAP)

 

$        314

 

$    107

 

$    111

 

$    695

 

$    299

 

$        (104)

 

$          (56)

 

$              (52)

 

$            -

 

$         1,314

                                         

% Change - Reported (GAAP)

 

17.9 %

 

(81.4)%

 

(75.3)%

 

(8.6)%

 

(27.6)%

 

n/m

 

(85.3)%

 

7.5 %

 

n/m

 

(41.7)%

% Change - Adjusted (Non-GAAP)

 

33.5 %

 

(25.4)%

 

(34.7)%

 

2.5 %

 

(10.9)%

 

n/m

 

(12.5)%

 

7.5 %

 

n/m

 

(11.3)%

% Change - Adjusted @ Constant FX (Non-GAAP)

 

72.5 %

 

(20.1)%

 

(10.5)%

 

10.5 %

 

(9.4)%

 

n/m

 

(40.0)%

 

1.9 %

 

n/m

 

0.1 %

                                         

Operating Income Margin

                                       

Reported %

 

13.8 %

 

1.8 %

 

2.7 %

 

12.7 %

 

10.0 %

                 

6.7 %

Reported pp change

 

3.0 pp

 

(7.5)pp

 

(6.4)pp

 

(0.2)pp

 

(3.3)pp

                 

(3.9)pp

Adjusted %

 

19.6 %

 

8.7 %

 

9.0 %

 

17.1 %

 

16.5 %

                 

13.2 %

Adjusted pp change

 

6.0 pp

 

(2.4)pp

 

(2.6)pp

 

1.5 pp

 

(1.5)pp

                 

(0.7)pp

                                         
                                         
                                         
   

For the Three Months Ended December 31, 2013

   

Latin America

 

Asia Pacific

 

EEMEA

 

Europe

 

North America

 

Unrealized G/(L) on Hedging Activities

 

General Corporate Expenses

 

Amortization of Intangibles

 

Other Items

 

Mondelez International

                                         

Net Revenue

                                       

Reported (GAAP)

 

$    1,337

 

$ 1,209

 

$ 1,065

 

$ 4,033

 

$ 1,844

 

$               -

 

$              -

 

$                   -

 

$            -

 

$         9,488

Divestitures

 

-

 

-

 

-

 

(2)

 

(8)

 

-

 

-

 

-

 

-

 

(10)

Adjusted (Non-GAAP)

 

$    1,337

 

$ 1,209

 

$ 1,065

 

$ 4,031

 

$ 1,836

 

$               -

 

$              -

 

$                   -

 

$            -

 

$         9,478

                                         

Operating Income

                                       

Reported (GAAP)

 

$        145

 

$    113

 

$       97

 

$    521

 

$    246

 

$              7

 

$          (68)

 

$              (53)

 

$           2

 

$         1,010

Integration Program and other acquisition integration costs

25

 

19

 

20

 

46

 

-

 

-

 

-

 

-

 

-

 

110

Spin-Off Costs

 

-

 

-

 

-

 

-

 

-

 

-

 

29

 

-

 

-

 

29

2012-2014 Restructuring Program

 

12

 

2

 

7

 

62

 

85

 

-

 

-

 

-

 

-

 

168

Gains on acquisition and divestitures, net

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(2)

 

(2)

Divestitures

 

-

 

-

 

-

 

-

 

(1)

 

-

 

(1)

 

-

 

-

 

(2)

Adjusted (Non-GAAP)

 

$        182

 

$    134

 

$    124

 

$    629

 

$    330

 

$              7

 

$          (40)

 

$              (53)

 

$            -

 

$         1,313

Currency

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

Adjusted @ Constant FX (Non-GAAP)

 

$        182

 

$    134

 

$    124

 

$    629

 

$    330

 

$              7

 

$          (40)

 

$              (53)

 

$            -

 

$         1,313

                                         

Operating Income Margin

                                       

Reported %

 

10.8 %

 

9.3 %

 

9.1 %

 

12.9 %

 

13.3 %

                 

10.6 %

Adjusted %

 

13.6 %

 

11.1 %

 

11.6 %

 

15.6 %

 

18.0 %

                 

13.9 %

 

 

                                       

Schedule 8b

Mondelez International, Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP Measures

Segment Data

(in millions of U.S. dollars)  (Unaudited)

                                         
                                         
   

For the Twelve Months Ended December 31, 2014

   

Latin America

 

Asia Pacific

 

EEMEA

 

Europe

 

North America

 

Unrealized G/(L) on Hedging Activities

 

General Corporate Expenses

 

Amortization of Intangibles

 

Other Items

 

Mondelez International

Net Revenue

                                       

Reported (GAAP)

 

$    5,153

 

$ 4,605

 

$ 3,638

 

$  13,912

 

$ 6,936

 

$               -

 

$              -

 

$                   -

 

$            -

 

$       34,244

Divestitures

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

Adjusted (Non-GAAP)

 

$    5,153

 

$ 4,605

 

$ 3,638

 

$  13,912

 

$ 6,936

 

$               -

 

$              -

 

$                   -

 

$            -

 

$       34,244

                                         

Operating Income

                                       

Reported (GAAP)

 

$        475

 

$    385

 

$    327

 

$    1,770

 

$    922

 

$        (112)

 

$       (317)

 

$            (206)

 

$          (2)

 

$         3,242

Integration Program and other acquisition integration costs

-

 

(1)

 

4

 

(5)

 

-

 

-

 

(2)

 

-

 

-

 

(4)

Spin-Off Costs

 

-

 

-

 

-

 

-

 

-

 

-

 

35

 

-

 

-

 

35

2012-2014 Restructuring Program

 

11

 

40

 

59

 

200

 

145

 

-

 

4

 

-

 

-

 

459

Acquisition-related costs

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

2

 

2

Remeasurement of net monetary assets in Venezuela

 

167

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

167

2014-2018 Restructuring Program

 

97

 

25

 

23

 

128

 

62

 

-

 

46

 

-

 

-

 

381

Costs associated with the JDE coffee transactions

 

-

 

-

 

5

 

31

 

-

 

-

 

41

 

-

 

-

 

77

Intangible asset impairment

 

-

 

48

 

-

 

9

 

-

 

-

 

-

 

-

 

-

 

57

Adjusted (Non-GAAP)

 

$        750

 

$    497

 

$    418

 

$    2,133

 

$ 1,129

 

$        (112)

 

$       (193)

 

$            (206)

 

$            -

 

$         4,416

Currency

 

205

 

20

 

63

 

-

 

9

 

-

 

(7)

 

(3)

 

-

 

287

Adjusted @ Constant FX (Non-GAAP)

 

$        955

 

$    517

 

$    481

 

$    2,133

 

$ 1,138

 

$        (112)

 

$       (200)

 

$            (209)

 

$            -

 

$         4,703

                                         

% Change - Reported (GAAP)

 

(16.7)%

 

(24.8)%

 

(13.7)%

 

4.2 %

 

3.7 %

 

n/m

 

(10.5)%

 

5.1 %

 

n/m

 

(18.4)%

% Change - Adjusted (Non-GAAP)

 

10.6 %

 

(10.5)%

 

(8.3)%

 

11.3 %

 

8.7 %

 

n/m

 

13.1 %

 

5.1 %

 

n/m

 

3.5 %

% Change - Adjusted @ Constant FX (Non-GAAP)

 

40.9 %

 

(6.8)%

 

5.5 %

 

11.3 %

 

9.5 %

 

n/m

 

9.9 %

 

3.7 %

 

n/m

 

10.2 %

                                         

Operating Income Margin

                                       

Reported %

 

9.2 %

 

8.4 %

 

9.0 %

 

12.7 %

 

13.3 %

                 

9.5 %

Reported pp change

 

(1.4)pp

 

(1.9)pp

 

(0.7)pp

 

0.6 pp

 

0.6 pp

                 

(1.7)pp

Adjusted %

 

14.6 %

 

10.8 %

 

11.5 %

 

15.3 %

 

16.3 %

                 

12.9 %

Adjusted pp change

 

2.0 pp

 

(0.4)pp

 

(0.2)pp

 

1.7 pp

 

1.4 pp

                 

0.8 pp

                                         
                                         
                                         
   

For the Twelve Months Ended December 31, 2013

   

Latin America

 

Asia Pacific

 

EEMEA

 

Europe

 

North America

 

Unrealized G/(L) on Hedging Activities

 

General Corporate Expenses

 

Amortization of Intangibles

 

Other Items

 

Mondelez International

                                         

Net Revenue

                                       

Reported (GAAP)

 

$    5,382

 

$ 4,952

 

$ 3,915

 

$  14,059

 

$ 6,991

 

$               -

 

$              -

 

$                   -

 

$            -

 

$       35,299

Divestitures

 

-

 

-

 

(20)

 

(11)

 

(39)

 

-

 

-

 

-

 

-

 

(70)

Adjusted (Non-GAAP)

 

$    5,382

 

$ 4,952

 

$ 3,895

 

$  14,048

 

$ 6,952

 

$               -

 

$              -

 

$                   -

 

$            -

 

$       35,229

                                         

Operating Income

                                       

Reported (GAAP)

 

$        570

 

$    512

 

$    379

 

$    1,699

 

$    889

 

$            62

 

$       (287)

 

$            (217)

 

$       364

 

$         3,971

Integration Program and other acquisition integration costs

33

 

41

 

56

 

88

 

1

 

-

 

1

 

-

 

-

 

220

Spin-Off Costs

 

-

 

-

 

-

 

-

 

-

 

-

 

62

 

-

 

-

 

62

2012-2014 Restructuring Program

 

21

 

2

 

14

 

131

 

160

 

-

 

2

 

-

 

-

 

330

Acquisition-related costs

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

2

 

2

Benefit from indemnification resolution

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(336)

 

(336)

Remeasurement of net monetary assets in Venezuela

 

54

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

54

Gains on acquisition and divestitures, net

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(30)

 

(30)

Divestitures

 

-

 

-

 

7

 

(2)

 

(11)

 

-

 

-

 

-

 

-

 

(6)

Adjusted (Non-GAAP)

 

$        678

 

$    555

 

$    456

 

$    1,916

 

$ 1,039

 

$            62

 

$       (222)

 

$            (217)

 

$            -

 

$         4,267

Currency

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

Adjusted @ Constant FX (Non-GAAP)

 

$        678

 

$    555

 

$    456

 

$    1,916

 

$ 1,039

 

$            62

 

$       (222)

 

$            (217)

 

$            -

 

$         4,267

                                         

Operating Income Margin

                                       

Reported %

 

10.6 %

 

10.3 %

 

9.7 %

 

12.1 %

 

12.7 %

                 

11.2 %

Adjusted %

 

12.6 %

 

11.2 %

 

11.7 %

 

13.6 %

 

14.9 %

                 

12.1 %

 

 

 

 

Schedule 9

Mondelez International, Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP Measures

Net Cash Provided by Operating Activities to Free Cash Flow excluding items

(in millions of U.S. dollars)  (Unaudited)

   
 

For the year

ended

December 31,

2014

   

Net Cash Provided by Operating Activities (GAAP)

$            3,562

   

Capital Expenditures

(1,642)

   

Free Cash Flow (Non-GAAP) 

$            1,920

   

Items

 

Cash impact of the resolution of the Starbucks arbitration (1)

498

   

Cash payments for accrued interest  and other related fees associated with debt
tendered as of February 6, 2014(2)

47

   

Free Cash Flow excluding items (Non-GAAP)

$            2,465

   

(1)

During the fourth quarter of 2013, the dispute with Starbucks Coffee Company was resolved. The amount for 2013 noted above reflects the cash received from Starbucks of $2,764 million net of $148 million attorney's fees paid. The amount noted above for 2014 reflects the taxes paid associated with the net cash received and additional attorney's fees paid in 2014.

   

(2)

February 6, 2014, the company completed a $1.6 billion cash tender offer for some of its outstanding high coupon long-term debt. The amount above reflects the cash payments associated with accrued interest and other related fees.

 

 

 

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SOURCE Mondelez International, Inc.

 

 

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